I'm an expert on business growth and overcoming organizational obstacles to success. I do keynote speaking at conferences and management meetings, and a workshop leader for companies wanting to find their next growth engine. Author of "Create Marketplace Disruption: How to Stay Ahead of the Competition" (Financial Times Press), a contributing editor for "International Journal of Innovation Science" and a leadership columnist for CIOMagazine and ComputerWorld. Currently serve as Audit Chair for 6D Global, and am CEO of Soparfilm Energy E&P company as well as Content Laboratory, a communications services company and coms software provider. Former head of business development for Pepsico and Dupont, consultant with The Boston Consulting Group. Harvard MBA. Live in Chicago.

Wal-Mart's Wrong-Headed Reorganization

For the last decade, Wal-Mart has been “dead money” in investor parlance. After a big jump between 1995 and 2000, the stock today is worth less than it was in 2000. There has been volatility, which might have benefited some traders. But for most of the decade Wal-Mart’s price has been lower. There has been excitement recently because the price has been catching up with where it was in 2002, even though there have been no real gains for long term investors.

What happened to Wal-Mart was a market shift. For many years being the market leader with every day low pricing was a winning strategy. Wal-Mart was able to expand from town to town opening new stores, all pretty much alike, doing the same thing and making really good money.

Then competitors took aim at Wal-Mart, and found out they could beat the giant.

Eventually the number of towns that both needed, and justified, a new Wal-Mart (or Sam’s Club) dried up. Wal-Mart reacted by expanding many stores, making them “bigger and better,” even adding groceries to some. But that added only marginally to revenue, and even less marginally to profits.

And Wal-Mart tried exporting its stores internationally, but that flopped as local market competitors found ways to better attract local customers than Wal-Mart’s success formula offered.

Other U.S. discounters, like Target and Kohl’s, offered nicer stores with more variety or classier merchandise – and often their pricing was not much higher, or even the same. And a new category of retailer, called “dollar stores” emerged that beat Wal-Mart’s price on almost everything for the true price shopper. These 99 cent stores, such as Family Dollar Stores, became really popular, and the fastest growing traditional retail concept in America. Simultaneously, big box retailers like Best Buy expanded their merchandise and footprint into more locations, dramatically increasing the competition against local Wal-Mart’s stores. And “category killers” like PetSmart grew offering more selection and often better pricing.

But, even more dramatically, the whole retail market began shifting on-line.

Amazon, and its brethren, kept selling more and more products. And at prices even lower than Wal-Mart. And again, for price shoppers, the growth of eBay, Craigslist and vertical market sites made it possible for shoppers to find slightly used, or even new, products at prices lower than Wal-Mart, and shipped right into the customer’s home. With each year, customers found less need to buy at Wal-Mart as the on-line options exploded.

More recently, traditional price-focused retailers have been attacked by mobile devices.

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I use my smart phone to check prices all the time now! Amazon almost always beats WMT, with all the price increases in Jan, the dismal service (cant find anyone), and now even the removal of the security service in many stores, its really not worth the risk!

Getting down to the basics, a business is only as viable as its ability to attract and hold customers/clients. I have been a WalMart customer for years. Up until about 2 years ago, WalMart gave the customer a good product for a good price. Now, WalMart has reduced the inventory offering tremendously so choice is not there like it used to be. The shoe department is a prime example of once-quality footwear offerings replaced by garbage products at higher prices. This trend is reflected throughout the stores. Brand names in food have been replaced by their generic brands at the same price as brand names in chain grocers. Less inventory, below par merchandise, higher prices all will spell the death knoll for this chain. I used to spend freely there but now I hardly go there and when I do, my purchases are few. People aren’t stupid. They can choose where to shop and it won’t be WalMart. The chain is dying from within. Just one customer’s observation and opinion.

Thanks for commenting nonajo. Your comment is not atypical, and I hope you felt comfortable offering it. Because Wal-Mart has been so fixated on “low price” it has drastically “lost its way” leaving itself a LOT less competitive. Analysts find it easy to go along with the ages-old perspective of the company, but reality is becoming far different – as you point out. By constantly trying to do more of the same, without innovation, Wal_Mart keeps becoming less competitive.